MIAMI — In early May, RBR+TVBR first shared the news that the world’s largest Spanish-language media and content company would be assuming ownership of a streaming platform that’s home to films and series en español from a sibling of sorts, thanks to common ownership by Searchlight Capital Partners L.P.
Now, that deal has closed, following Hemisphere Media Group shareholder approval of its acquisition by that TelevisaUnivision lead investor — approval being questioned by one institutional stock holder grumbling over the “supervoting” status of private Class B shareholders.
As of today, Pantaya is now a TelevisaUnivision company.
“The strategic acquisition of Pantaya marks an important milestone in our ongoing digital transformation, bringing together highly complementary streaming assets and building upon TelevisaUnivision’s global streaming service, ViX and ViX+,” said Pierluigi Gazzolo, President and Chief Transformation Officer of TelevisaUnivision. “We are excited to welcome the Pantaya team, its content, and its subscribers to our platform, and look forward to working together to provide our audience with an even greater variety of content, as we accelerate our efforts to redefine the global streaming landscape and solidify ViX and ViX+’s position as the largest Spanish-language streamer in the world.”
Getting Pantaya, however, is part of a much larger asset exchange that not only resolves possible regulatory scrutiny over market concentration but also positions Searchlight as the bigger common denominator between two former rivals in Puerto Rico.
Hemisphere, led by President/CEO Alan Sokol, handed TelevisaUnivision its Pantaya property in exchange of Spanish-language spoken word giant WKAQ-AM 580 and its simulcast partners; and the “KQ105” network based at WKAQ-FM 104.7 in San Juan. An additional undisclosed cash payment is being made to Hemisphere by TelevisaUnivision, but that could be a formality considering Searchlight’s investment in each company.
For Hemisphere, it is Searchlight portfolio investment Gato Investments LP‘s subsidiary that on September 12 took the company known for its WAPA television operation in Puerto Rico, Televisión Dominicana in the Dominican Republic and a host of pay-TV channels serving Latino consumers across Iberoamérica, private.
This came following shareholder approval, announced by Hemisphere on September 8. Hemisphere stockholders received $7 for each share they held at the time of closing.
This shareholder approval was blasted as “misleading” in a letter sent on Monday (9/12) to Hemisphere board chairman Peter Kern by Edenbrook Capital Founder and Managing Partner Jonathan Brolin.
Edenbrook, based in Westchester County, N.Y., had ownership of nearly 15% of the publicly traded A shares of HMTV, which ceased trading on Sept. 12 at $7.15, fifteen cents higher than the agreed-to shareholder offer that took the company private. HMTV is now a delisted stock ticker symbol.
In his letter to Kern, Brolin said, “Last Thursday was a sad day for shareholder democracy. After market close on September 8, Hemisphere Media Group, for which you serve as Chairman, issued a press release with, what we believe to be, [a] misleading title.”
He pointed to a press release that states Hemisphere Media Group stockholders approved the acquisition of the company by a subsidiary of Gato Investments LP.
Why is this misleading? “Because the majority of the stockholders of the company’s publicly traded Class A shares voted against the transaction for the company to be taken private by insiders at a price that we believe (as we evidence in our prior letters, here, here and here) significantly undervalues the company,” Brolin charged.
He calls the transaction an “Insider Takeover,” with Class B shareholder approval taking greater precedence over the Class A shareholder vote due to “supervoting” status of 10 votes per privately held share.
That’s not uncommon for publicly traded companies. Yet, Brolin expressed concern as some 11,884,980 shares were voted against the merger. “If you exclude those insiders who are not disinterested stockholders in the traditional sense, then it seems 63% of public stockholders likely voted against the deal,” he claims.
Neither Gato nor Hemisphere has commented on the Edenbrook letter. HMTV’s five-year trend shows pre-COVID 19 trading between $10 and $15 per share. Since March 2020, HMTV reached as high as $12.71 in July 2021; year-to-date, shares climbed briefly above $8 in early July 2022.
Speaking of the Pantaya deal, Sokol said, “We are grateful for the tremendous work performed by the Pantaya team, which has made it the leading subscription streaming service for U.S. Hispanics. The addition of Pantaya to ViX+ will now create the most comprehensive selection of Spanish-language content targeted to this expansive audience.”
Communication regarding Pantaya came from TelevisaUnivision; Hemisphere commented on the Gato acquisition only.
Neither company commented on the transfer of control of WKAQ-AM & FM in San Juan and WUKQ-AM & FM in Ponce to Hemisphere from TelevisaUnivision. However, Sokol in May noted, “Hemisphere’s acquisition of certain TelevisaUnivision Puerto Rican radio stations including WKAQ-AM and KQ105 will be an ideal complement to WAPA, Puerto Rico’s leading broadcast network.”
Sokol also revealed in May that once the transaction closed, the TelevisaUnivision Uforia programming team will continue to program heritage Latin Top 40 KQ105. Details as to how that arrangement will transpire were not disclosed.
For WKAQ-AM, the big No. 1 in the Nielsen Audio ratings for Puerto Rico, a closer alignment with WAPA and its strong news brand could be seen in the coming weeks.
The transfer in control of WKAQ-AM and the “KQ105” network’s FM properties in Puerto Rico will bring to a close 19 years of ownership of the stations by Univision and a predecessor company.
When the former Hispanic Broadcasting Corp. announced in February 2003 that it was purchasing WKAQ-AM & FM in San Juan and WUKQ-AM & FM in Ponce from a foundation set up by the stations’ founder, Angel Ramos, it was hardly greeted with cheers across Puerto Rico. For some, HBC was seen as an outsider group, and control of two of the commonwealth’s biggest properties were being taken by “mainlanders.”
Heavy opposition arose from several Puerto Rican politicians and recording artists as one . Bernardo Vazquez Santos filed a petition to deny the transaction. The FCC rejected the petition without comment, and in June 2003 approved HBC’s $32 million acquisition of the four radio properties.
Meanwhile, the FCC at the time was reviewing the sale of Hispanic Broadcasting Corp. to Univision Communications. Valued at $3.1 billion, the transaction was first announced in June 2002 but did not win Commission approval until September 2003.
